On June 21, the Consumer Financial Protection Bureau (CFPB) released two reports detailing access to banking and the financial experience of consumers living in the Southern states. Many areas of the South are considered “banking deserts” because of the lack of banking options. In the press release announcing the release of the reports, CFPB Director Rohit Chopra stated, “[t]he rural South faces distinct challenges when it comes to fair access to banking. Understanding regional differences across the country will help us determine where financial marketplaces can work better for all.”

Demographically, the Southern region of the United States is unique. Nearly 48 million people live in this region, which includes Alabama, Arkansas, Georgia, Louisiana, Mississippi, North Carolina, South Carolina, and Tennessee. About 23% of people live in a rural county, compared to 14% nationwide, and rural Southerners are older and tend to earn less than their non-rural counterparts. These states include 48% of the nation’s persistent poverty counties (PPC). Seventy percent of the United States’ rural Black population live in the Southern region.

Key findings of the Banking and Credit Access in the Southern Region of the U.S. report include:

• The Southern region has a relatively low number of branches per person when compared to the rest of the country.
  • Specifically, the South has 3.6 branches per 10,000 people, compared to 5 branches per 10,000 people nationally.
• The Southern region has a higher rate of unbanked households.
  • Reasons include minimum balance requirements, distrust of banks, high fees, and identification requirements.
• In examining the mortgage lending market, the CFPB found that even though rural Southerners apply for home loans at the same rate as consumers nationally, those applications are more likely to be denied.
  • Specifically, 27% of mortgage applications are denied in the rural South compared to 11% nationally. Also, rural Southerners whose applications are approved tend to pay higher interest rates.
  • Initial analysis shows credit scores alone do not explain this statistic. Both race and rural residency appear to play roles. People of color are more likely to be denied credit and rural Southerners are denied at higher rates than their non-rural counterparts.
  • The report did note that some mortgage lenders have strong records of reaching historically underserved markets within the region.
• Small businesses in the South employ nearly half of the workforce. Minority-owned and women-owned businesses account for roughly two-thirds of all small businesses.
  • There are indications that not all businesses are getting access to needed capital.

Key findings of the Consumer Finances in Rural Areas of the Southern Region report include:

• Sixty-seven percent of rural Southerners have a credit card as compared to 75% in rural areas nationwide.
  • Of those 67% with credit cards, they tend to have a higher utilization rate than consumers nationwide.
• In Southern PPCs, 20% of consumers are delinquent on an auto loan.
  • Rural Southerners are highly dependent on vehicles for transportation due to longer commutes and a lack of public transportation options.
• Rural Southerners are more likely to have medical collections on their credit report.
  • Since nationwide consumer reporting agencies have recently changed their reporting practices to remove medical collections that are paid or under $500, rural Southerners are more likely to have at least one medical collection eligible for removal.